Quebec’s Line 9 decision should be an easy one

The Quebec government appears to be looking favourably on Enbridge Inc.'s Line 9 oil pipeline reversal, as it probably should.

In an era of environmental fights, jousting job creation claims and political grandstanding surrounding crude oil pipeline proposals, this is the easiest one to move forward.

The Line 9 reversal would play a couple of important roles. It would be a way for Quebec to step gingerly into an integrated North American energy market that it is wary of, and a test for Enbridge to show it has, as it says, learned lessons from high-profile misadventures that hammered the company's reputation.

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The National Energy Board is weighing the application following public hearings that were cut short because of safety concerns, as protests in Toronto grew boisterous. A decision is expected early next year. Meanwhile, a Quebec National Assembly committee is holding hearings on it.

Of course, the biggest advantage of Line 9 is that it is already there, and has been since the 1970s when it was designed to do pretty much what Enbridge wants it to do now – supply Quebec refineries with Western Canadian oil.

The pipeline would ship 300,000 barrels of oil a day from Sarnia, Ont., supplying the Suncor Energy Inc. refinery in Montreal and Valero Energy Corp. plant near Quebec City. It is not a massive new pipeline that green groups could argue will foster a massive oil sands development expansion.

The original incarnation of the conduit was meant to offer protection for Eastern Canada against the Middle East oil embargo threat. Now it's about providing access to cheaper crude more than a decade after the flow direction was changed to westbound so Ontario plants could use imported oil – something they no longer want anything to do with.

This is key for Quebec, as government and labour leaders look around and see refineries on the eastern part of the continent closing. Royal Dutch Shell PLC's facility in Montreal was a casualty three years ago.

Since then, Imperial Oil Ltd. is turning its Dartmouth, N.S., refinery into a terminal and Korea National Oil Corp. has reportedly sought buyers for its plant in Newfoundland, all because of fuel-manufacturing overcapacity on both sides of the Atlantic and the higher cost of imported oil.

Quebec is down to two refineries and they require cost-effective feedstock, the stuff from the west, and the only way to get it there today is by rail, a method under intense and deserved scrutiny following this summer's deadly disaster in Lac-Mégantic.

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"I hope the positive aspects of this project can outweigh the negative ones, because there are 4,000 jobs related to this," Quebec Minister of the Environment Yves-François Blanchet said of the Line 9 proposal this week. "If this wasn't an economic issue, we wouldn't even be discussing it."

Enbridge says it has taken great care to look after those negatives. As it has pushed for approval it's promised it is not the same company it was in 2010.

That was when when a pipeline rupture sent Alberta heavy crude gushing into the Kalamazoo River system in Michigan, forcing a $1-billion cleanup. A U.S. regulator said Enbridge's botched response when confronted by warnings of the break was akin to the Keystone Kops of silent film fame.

It has since sought out the most up-to-date inspection, integrity and emergency response technology, executives contend. Meanwhile, it has been digging up sections of the pipeline to inspect anomalies detected by in-line tools.

Members of the Quebec committee suggested the company make available its inspection reports, as they seek assurances about safety. Enbridge would do well to comply as a show of good faith.

Green groups and First Nations have numerous beefs about the energy industry and governments that back any and all pipeline proposals, and many of those concerns are legitimate.

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However, the country's economy would be in for a shock if no pipelines get built and Canadian crude oil keeps selling at deeper discounts to U.S. and international grades, with Quebec refineries forced to depend on imports.

If Line 9, the easy one, is blocked, it would be tough for the nation's regulators to even consider giving the other more complex and controversial projects, such as Enbridge's Northern Gateway, Kinder Morgan Inc.'s Trans Mountain expansion or TransCanada Corp.'s Energy East pipeline, a green light.

Jeffrey Jones is a veteran journalist specializing in energy, finance and environment for The Globe and Mail’s Report on Business, based in Calgary. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general topics. More

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